Analyst Outlines Omicron Oil Demand Impact

Analyst Outlines Omicron Oil Demand Impact
Rystad Energy's head of oil markets, Bjornar Tonhaugen, offers his insight.

Real-time transportation data globally suggests there has not been any significant impact on oil demand so far from Omicron.

That’s what Rystad Energy’s head of oil markets, Bjornar Tonhaugen, said in an oil market report sent to Rigzone on Tuesday, adding that, for now, the Omicron risk remains exactly that, “a risk”.

“Instead of an outright deeper lockdown impact, market balances will remain somewhat tight for January and February and keep oil prices supported, especially with supply side concerns and a disciplined OPEC+,” Tonhaugen stated.

In the report, Tonhaugen noted that ongoing outages in Libya, struggling production recovery in Nigeria, and reduced expectations for Russian production capacity add “bullish weight” to the scale from the supply side.

On November 26, 2021, the World Health Organization (WHO) announced that it had designated the B.1.1.529 strand as a variant of concern named Omicron. The organization noted that the B.1.1.529 variant was first reported to WHO from South Africa on November 24, 2021.

Global confirmed cases of Covid-19 have increased consecutively every week since WHO’s Omicron announcement. The week commencing December 27, 2021, saw the highest ever number of confirmed Covid-19 cases at 9.52 million, WHO figures highlight. The previous weekly case record was reported in the week commencing April 26, 2021, at 5.69 million, WHO data shows. Global Covid-19 deaths have decreased for the past four consecutive weeks, according to WHO.

As of January 4, 6.18pm CET, there have been 290.9 million confirmed cases of Covid-19, with 5.4 million deaths, WHO figures outline. A total of 8.6 billion vaccine doses are said to have been administered as of January 3.

Rystad Energy is an independent energy research and business intelligence company providing data, tools, analytics and consultancy services to clients exposed to the energy industry across the globe, its website notes. Founded in 1948, WHO describes itself as the United Nations agency that connects nations, partners and people to promote health, keep the world safe and serve the vulnerable.

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